Cryptocurrencies have always fascinated me. The thought of a decentralized financial system and the possibility of high returns on investments has always been highly appealing to me. Yet, as thrilling as it is, the cryptosphere is also fraught with dangers and frauds. Recently, the U.S. Securities and Exchange Commission (SEC) issued an investor alert about common tactics fraudsters use in crypto asset securities scams. I found this information extremely revealing and felt compelled to share.
Sourcing
One way these scammers work is through social media or text messages, which they use to contact their victims. This method is very personal and direct, thus, scammers can easily gain your trust when they get connected with you directly using Facebook, Twitter, or even texting platforms. It feels real, just like a friend reaching out, but this confidence may be misplaced. The con artists make friends through these platforms so that they can trick others into subscribing to fake investment plans’ schemes. On my part, I think it’s necessary to first ascertain who approaches you on social media concerning investment opportunities.
Another technique is to use developing technologies such as AI. AI is a catchy word that attracts so much attention. The fraudsters take advantage of this by asserting that their investment schemes are supported by state-of-the-art AI technology. This seems impressive and revolutionary, hence easily attracting potential victims. Nevertheless, many of these plans are just an illusion. Hence, it’s necessary to ignore the technology jargon and know the actual worthiness and validity of the proposed investments.
There are also impersonation and infiltration tactics, which are often used by scam artists. In order to appear trustworthy, they usually pretend to be from reliable sources or may even hack into genuine accounts. I find this really disturbing because it can seem very persuasive sometimes. We can easily drop our guards when we recognize a name or logotype we trust. Taking a second look at any communication on investments, regardless of how genuine it may seem at first glance, makes one aware of its brazen reminder.
Inflation of the price of cryptocurrencies, such as'memecoins’, and selling them at a higher price constitutes the fourth strategy. This is what some people call the pump-and-dump trick. It’s interesting how the value of new coins fluctuates, then eventually crashes in a matter of minutes. When others are making quick money, it makes you think about joining them as well. But note that these sudden increments in prices are usually artificially engineered so that crooks can dispose of their holdings at huge profits before prices slump. The unsuspecting investors are the ones who lose when the prices go down. Therefore, one must be cautious and do extensive research before venturing into any new or unknown crypto asset.
Finally, scammers often ask for extra fees to help with withdrawals from funds or traction from losses incurred previously by customers. This is evil since it preys on individuals who have been hurt trying to recover their investments. The temptation to get your money back might be too much, however, this could also be another way for fraudsters to steal more from victims already swindled by them before. It is important to be careful about demanding additional fees and confirming they are legitimate through official means alone.